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February 1998

The economics of technologyMost governments would like their national economies to grow more quickly. This is why many countries work hard to foster research and development, especially in high-tech industries. Such industries are said to have a strategic value to the economy because new technology is considered the engine of long-run productivity growth. And many countries reckon they can get ahead economically if they have a technological edge.

To help teach policy makers more about the role of technology in economic development and to give young researchers an opportunity to present their latest findings, the UNU's Institute for New Technologies (UNU/INTECH) held a conference in Seville, Spain, called "Technology Policy and Less Developed R&D Systems in Europe."

Many interesting papers and case studies were presented at the event on 17 and 18 October 1997. Especially interesting were the papers that discussed the economic transformation Ireland has gone through by successfully building up its technological capacity.

For more than a century, the view of Ireland that the Irish knew best was from the viewpoint of a boat heading somewhere else. However, over the past 10 years Ireland has enjoyed an astonishing economic success. S. Hayward, a professor at the University College of Dublin, gave a detailed assessment of how the country's technology policy has helped move Ireland from one of Europe's poorest countries to one about as prosperous as the European average.

Dr. Hayward pointed out that successive governments have used a "partnership approach" to attract foreign investment in new high-tech enterprises. These firms have driven the country's economic transformation. Companies such as Dell, Fujitsu, Gateway, IBM, Intel, Motorola and other leaders of the computer and electronics industries have built new facilities in Ireland. Now, nearly a third of the personal computers sold in Europe are made by the Irish.

New technological investment has also poured into other sectors of the economy, especially food processing, pharmaceuticals and telemarketing. "The government's partnership approach has been very successful in attracting new technology," Dr. Hayward said.

Israel has also developed successful policies for spawning new technologies. Moti Sokolov, from Tel Aviv's Interdisciplinary Center for Technological Analysis and Forecasting, told participants about the technological support system that has evolved in Israel. He reckons that Israel's system could be divided into three distinct areas: matchmaking, investment and consultative support. He further discussed how this system creates a network of institutions and instruments that assist firms which develop technology.

According to Dr. Sokolov, there are two key factors to Israel's success. One is the comprehensive support that companies are given from the initial stages of technological development through to product marketing. The other is a careful mix of free entrepreneurship and public finance. "With proper adaptation to local conditions, these concepts can be implemented in other countries," Dr. Sokolov said.
The Israeli product-cycle approach has been particularly successful because it concentrates on more that just inventing technology. New discoveries have to be turned into something that people will want to buy.

Dylan Jones-Evans, a professor at the University of Glamorgan, UK, argued that one of the biggest challenges facing Europe's poor regions is their limited capacity to convert scientific breakthroughs into commercial successes. As examples, he presented the research findings of several Irish universities.

"There are a number of lessons to be learnt from these cases," he said. The first lesson is that, given the right environment and support, traditional universities can become much more entrepreneurial. Second, research currently being done at universities can be enhanced considerably: Scientists can be offered incentives for inventing patentable technologies; universities can work more closely with private companies by setting up joint-venture, on-campus laboratories; and universities can establish their own firms. "All of these initiatives can help keep top researchers from moving elsewhere," Dr. Jones-Evans suggested. And third, he told the participants that successful technology transfers between universities and businesses do not just happen. "A good system of incentives, policies and programmes first needs to be put into place."